General Mills Says If You 'Like' Cheerios On Facebook, You Can No Longer Sue

from the likewrap dept

Three years ago when the Supreme Court ruled in AT&T Mobility v. Concepcion, basically allowing binding arbitration clauses in contracts to exclude class action suits, we noted that it was an unfortunate pitting of a broken class action system against a broken arbitration system. Both arbitration and class action lawsuits may have some good features -- and the concepts behind each sound good, but both have been abused to extreme levels. On the class action side, often these lawsuits have little to do with righting wrongs, and very much to do with big paydays for lawyers (and some companies even turn class action lawsuits into marketing opportunities).

On the arbitration side, while the theory of having a neutral third party settle the dispute without having to go through an expensive litigation process certainly sounds good, the reality is quite different. Since arbitrators are hired, and large companies are frequent employers, arbitrators have very strong incentives to side with those companies, in order to make sure they'll be hired in the future. When you have one party who is likely to be a frequent employer, and another who will only engage in the transaction once, guess where the bias is going to fall. And, indeed, multiple studies have shown that's exactly what happens. In one case 94% of rulings went against consumers. Another study showed that companies that regularly use arbitration get higher awards.

So neither side in that fight necessarily could be said to "represent the good guys." However, as we noted when the Supreme Court ruling came out, it seemed likely that this would lead to companies putting arbitration clauses absolutely everywhere. At the time, we suggested a simple fix: have Congress make it clear that you can't give up your right to go to court based on a non-negotiated contract. And that still seems to make sense, but of course, nothing has actually been done.

It should come as little surprise, then, that the prediction of seeing companies put arbitration clauses absolutely everywhere is happening -- and to ridiculous levels. The NY Times has an article about how General Mills, makers of Cheerios, Chex and lots of other cereals, has updated some legalese on their own website to basically say if you do absolutely anything related to its cereals -- including liking them on Facebook, or buying them -- you give up your right to go to court and are agreeing to arbitration:

General Mills, the maker of cereals like Cheerios and Chex as well as brands like Bisquick and Betty Crocker, has quietly added language to its website to alert consumers that they give up their right to sue the company if they download coupons, “join” it in online communities like Facebook, enter a company-sponsored sweepstakes or contest or interact with it in a variety of other ways.

Instead, anyone who has received anything that could be construed as a benefit and who then has a dispute with the company over its products will have to use informal negotiation via email or go through arbitration to seek relief, according to the new terms posted on its site.

In language added on Tuesday after The New York Times contacted it about the changes, General Mills seemed to go even further, suggesting that buying its products would bind consumers to those terms.

While one might argue that you get what you deserve when you "like" a cereal on Facebook, this still seems ridiculous and excessive. I can almost see the sense of saying if it's in a binding contract you sign as a subscriber (e.g., mobile phone service) such a clause can be considered legit, but something like this, which isn't even "clickwrap" but more "likewrap" can't possibly be legally binding. Not only has the person probably not read the details, from what's being said, this "binding arbitration" clause may appear on a website they've never visited at all. I can't see how that can or should be considered a true contract in any sense of the word.

I suspect the only possible way this will ever get fixed is if some important member of the government gets screwed over by forced arbitration. Like, say, if some senator's child is poisoned or something and then isn't allowed to sue. Until then, I guess the rest of us lowly peons will have to settle for being screwed over ourselves. And as it stands, it's not really surprising, just disappointing.

Even if the customer was aware of the terms, you can't enforce a contract like that based on a "like". A contract requires both sides to get some form of compensation, and you are in no way getting any compensation for your "like".

S'okay - I'll point to my CELA that they approved as well

States the following, and I tape it to every box of cereal that I eat.

By allowing my CELA to stick to your box, you, the cereal provider, agree to the following terms.

My agreement supersedes any and all previous agreements. My agreement can never be superseded, ever, even if forced to sign a new contract while someone holds a nuke over my head, my agreement will still be valid and enforceable over yours.My agreement allows me to sue you for over 1 quadrillion dollars if I so much as bite my cheek while chewing on your cereal, or burn my tongue if I overheat my coffee that I drink while eating your cereal.My agreement holds your corporate officers and board members fiscally and legally responsible for any and all effects of using your cereal and any activities taken while eating said cereal, no limitations apply.My agreement says that you owe me $1000.00 per bite of your cereal that I eat just to suffer through the crap you put in it.

Re: S'okay - I'll point to my CELA that they approved as well

Re: S'okay - I'll point to my CELA that they approved as well

Perhaps make your 'bitewrap' contract go into effect if a company or their agent or one of their customers accepts money from you in exchange for their product.

If you can be bound to terms you never read on a website you've never visited because you commented on an ad inserted into your news feed by a third party, then anyone could be bound to any contract for any reason, even if they never had contact with the other party to the contract.

That's utter madness...but if it can be done to you, you can do it to others...and corporations are persons, right?

Each box of Alphabits contains the full legal terms. Some assembly required. Two scoops of lawyers' brains in every box. I found a 'D' and an even number of 'C's in my Cheerios! Remember kids, breakfast is your most important meal of the day. It's the LAW.

Arbitration is one thing, but they also include a secrecy clause. So if you go to arbitration over their use of poison in their products or something, you apparently can't TELL anyone about it.

Arbitration needs reform. Consumers should never be forced into an arbitration agreement for a publicly available product of any kind. In my perfect world, this even includes contracts which ARE partially negotiated, like when you buy a car.

Arbitration is fine, but it should be agreed to AFTER there is an actual dispute. At the very least there should be a business relationship more involved than visiting a website or printing a coupon.

"Some web browsers may transmit “do-not-track” signals to the websites and other online services with which a user communicates... General Mills currently does not take action in response to these signals."

"Security For Credit Card Data And Transaction Information ... we cannot absolutely guarantee the security of any information you provide online; you provide it at your own risk." Wow, THAT inspires confidence. And remember, if any of their other customers did find a security flaw and took them to arbitration over it, you wouldn't know because they aren't allowed to tell anyone.

Re:

Arbitration is fine, but it should be agreed to AFTER there is an actual dispute. At the very least there should be a business relationship more involved than visiting a website or printing a coupon.

Dispute resolution clauses are common in business contracts. They allow for both parties to amicably resolve disputes, without going to court (which usually precludes those parties ever doing business with each other again, due to costs and the adversarial nature of lawsuits). When agreed to by informed (equal-ish) parties, they help keep people from acting crazy.

Arbitration clauses are standard in the contracts we give our clients (I'm an officer in an IT Consulting firm that I founded with two other partners.) We've only ever had one dispute, but as our clients are generally bigger than us, fair arbitration prevents them from drowning us in legal fees. In that particular instance, just reminding the client of our dispute resolution agreement got them acting sane.

Of course, in our case, we're talking about $10,000-$100,000 contracts negotiated and signed by informed parties who have access to legal counsel. So, while I think that dispute resolution agreements have an important role in business agreements, having hidden arbitration policies that are implicitly "agreed" to by consumers who have absolutely zero negotiating power, like General Mills is doing, is utterly deplorable.

Beyond the obvious horrible problems for consumers, their under-handed business practices undermine public opinion of corporations. As a business owner who believes that businesses can and should be actors for the public good (and acts accordingly), I am personally offended when companies act like this. Unfortunately, people are dicks, so this sort of behavior is all too common. It's indefensible.

Wont stick at the moment

Something as simple as being made aware of the terms does not make the terms valid. This will be the same situation as shrink wrap licenses. A few Judges will say its enforceable and a few will say its not.

What will happen is if arbitration rules in favor of big business over something major to the point where you can show a good claim and bias then we can start going after business.

The most likely case I see will be, at some point you used a .50 cent coupon, the court will agree, for that specific item, your terms can be valid, but not for all purchases from now till the end of time. Otherwise everyone will play got-ya games.

So basically, if I say that if you buy my crap you agree to arbitration, and then hire an arbitrator who is basically told "your job lasts as long as your rulings for us do", I can basically be immune to lawsuits because they won't be harmed by my product unless they buy it, and then they must use my arbitrator minion who will rule for me? BUAHAHAHA!

Has General Mills lost its mind? Buying their products binds you to an agreement so you cannot sue them? Well, in order for you to sue a company, you would have had to purchase their merchandise or product line first.

I'd like to know who their attorney is because he obviously needs to be fired for giving General Mills bad advice.

Binding Arbitration

The Federal Arbitration Act needs to be amended to prohibit binding arbitration clauses in "take it or leave it" contracts. In fact, we need to severely limit the kinds of terms that are allowed in adhesive contracts in general.

No "click wrap", "shrink wrap", or adhesive license of any kind should ever take away existing legal rights. This includes the right to sue, the right to sell the things you've purchased, the right to make non-infringing copies of your digital media, and, indeed, any of the things you're legally allowed to do absent a contract to the contrary.

Corporate Adhesion Agreement

By entering into binding arbitration with me over any disputes regarding your product(s), you agree that your products are unfit for purpose or otherwise defective and must withdraw all your product(s) from the marketplace. If you do not pull your product(s) in accordance to this agreement, you agree to waive your right to binding arbitration on all other customers and agree to resolution of further disputes by class action lawsuit. The terms of this agreement do not apply if you agree to resolve any dispute regarding your products by settlement or civil lawsuit in the court of law.

[T]o hold that it was competent for one party to put the other parties to the contract at the mercy of its own misconduct... can never be lawfully done where an enlightened system of jurisprudence prevails. Public policy forbids it, and contracts against public policy are void.

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A Public Notice of Intent to void the agreement would seem like one good option, besides pressuring Attorneys General to take action as in the case of New York v. NETWORK ASSOCIATES, INC.

"The Attorney General seeks to enjoin all of these acts, by its authority granted under GBL § 349 and Executive Law § 63(12). The unacceptable alternative to such an injunction is that large companies, aided by the courts, shall in their sole discretion eliminate speech criticizing or reporting flaws in software and other products. No court in the United States can or ought enforce such a vast prior restraint on consumers, reviewers, and the media at large.Accordingly, the Attorney General asks this court to grant the relief requested in the accompanying Verified Petition, enjoining Network Associates from enforcing or disseminating the Censorship Clause, or from representing to consumers in any manner that they are restricted from criticizing, commenting on, or reviewing Network Associates’ mass-marketed software."

give up their right to sue the company if they download coupons, “join” it in online communities like Facebook, enter a company-sponsored sweepstakes or contest or interact with it in a variety of other ways.

Instead, anyone who has received anything that could be construed as a benefit and who then has a dispute with the company over its products will have to use informal negotiation via email or go through arbitration to seek relief

Liking a product is not a benefit to the consumer; it's a benefit to the company. Given that, I think homeless people should write the following on their tin cans: "By donating to me, you agree not to sue me should I stab you with a screwdriver during a psychotic episode."

Re:

As someone with a fair bit of experience regarding contracts with binding arbitration clauses*, if GM tried to use this against a customer in (civil) court, the judge would legally have to throw out the case as the court does not have jurisdiction. If charges were brought under the CFAA, for whatever reason, that would take place in criminal court, not civil court, where suing takes place.

* (I'm not a lawyer, but was sued once and ended up getting the whole thing thrown out on the basis of a binding arbitration clause included in the contract by the party that sued me. This would not have happened had I not explicitly made the judge aware of it.)

Hmmm...there was something last year that happened in some of Kellogg's Mini Wheats variants(not the 2 classic flavours) where pieces of shredded metal was found in about 30k-40k boxes. Maybe they took notice because Kellogg's got in trouble...

Re:

Pieces of shredded metal found in cereal boxes.. I heard once that 'Fortified With Iron!' on cereal boxes literally means that small specs of iron are included in the bag the cereal comes in. Not infused in the cereal, just included in the same packaging.

Forum Selection and Arbitration Clause

Dissent[edit]Black's four-part dissent was longer than the majority opinion he responded to. He took issue with every aspect of Fortas's reasoning.

In his introductory paragraph, he was blunt:

The Court holds, what is to me fantastic, that the legal issue of a contract's voidness because of fraud is to be decided by persons designated to arbitrate factual controversies arising out of a valid contract between the parties. And the arbitrators who the Court holds are to adjudicate the legal validity of the contract need not even be lawyers, and in all probability will be nonlawyers, wholly unqualified to decide legal issues, and even if qualified to apply the law, not bound to do so. I am by no means sure that thus forcing a person to forgo his opportunity to try his legal issues in the courts where, unlike the situation in arbitration, he may have a jury trial and right to appeal, is not a denial of due process of law. I am satisfied, however, that Congress did not impose any such procedures in the Arbitration Act.[14]

He noted that Congress had explicitly not included in the FAA the language it normally used to apply to all commerce, leading him to doubt that the arbitration clause in the consulting agreement was covered by it. Nor did the Act provide as clear an answer as the majority claimed as to what sort of challenges to the formation or execution of the contract might necessarily be first heard by a court. And lastly the majority had not provided sufficient justification for its reading of Bernhardt and Erie Railroad. "The Court approves", he protested, "a rule which is not only contrary to state law, but contrary to the intention of the parties and to accepted principles of contract law — a rule which indeed elevates arbitration provisions above all other contractual provisions"[15]

His second and third sections went into great detail about the legislative history of the FAA, quoting from Montana Senator Thomas J. Walsh's statements about it during hearings and those of the American Bar Association's lobbyists, who had helped draft and pass it, suggesting that it was not meant to be interpreted as the majority and the Second Circuit had. He noted that New York's state Arbitration Act, on which the federal law was based, explicitly provided that a claim of misrepresentation in a contract with an arbitration clause was to be heard by a judge. "Thus, 35 years after the passage of the Arbitration Act, the Second Circuit completely rewrote it", in Robert Lawrence, whose reasoning the Court was now accepting.[16]

"If Prima's allegations are true," Black concluded,"the sum total of what the Court does here is to force Prima to arbitrate a contract which is void and unenforceable before arbitrators who are given the power to make final legal determinations of their own jurisdiction, not even subject to effective review by the highest court in the land."[17]

Legacy[edit]Prima Paint established in federal jurisprudence what became known as the "separability" or "severability" principle in contracts with arbitration clauses, under which a legal fiction is created that the clause itself constitutes a contract separate from the underlying, or "container", contract.

Starting in the mid-1980s, the Court has greatly expanded the reach of Prima Paint in later cases. Since some of these have applied to the expanded use of arbitration clauses in contracts of adhesion between companies and consumers, some consumer advocates and legal scholars have criticized the decision as the inadvertent opening wedge of an assault on the right to litigate, and a weakening of state contract law and the Erie Railroad principle of deference to state common law.

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Arbitration Clause in Wiki

An arbitration clause may nevertheless be challenged and held invalid if it designates a biased party as the arbitrator...

Other terms may void an arbitration clause...

may also be voided as unconscionable because of the relative positions of the parties involved....

the agreement lacks mutuality of obligation...

substantive unconscionability where the contract limited the damages...

Some legal orders exclude or restrict the possibility of arbitration for reasons of the protection of weaker members of the public, e.g. consumers...

arbitration agreements with consumers are only considered valid if they are signed, and if the signed document does not bear any other content than the arbitration agreement...

Update

Arbitration in Texas

from "http://www.strasburger.com/calendar/news/appellate/Can-a-Court-Compel-Party-Who-Did-Not-Sign-Arbitr ation-Agreement.htm" Strasburger Atty-at law TEXAS Even though a signatory to an arbitration agreement cannot compel a non-signatory to arbitrate, the converse is not true. A non-signatory to an arbitration agreement can compel a signatory to arbitrate. In a recent Texas Supreme Court decision, a non-signatory to a contract containing an arbitration clause enforced arbitration against a signatory to the agreement. In re Rubiola, 334 S.W.3d 220, 226 (Tex. 2011). In that case, the Salmons bought a house from Greg Rubiola. The Salmons financed the purchase with Rubiola Mortgage Co. The loan agreement provided for arbitration of all disputes between the “parties” which was defined to include officers and employees of the corporate signatory. When one of the corporate officers of the finance company (who was the agent for, and brother of, the seller of the house) was sued, the Supreme Court held that he was a “party” entitled to compel the home buyer/borrower to arbitrate.